Why Paypal is still a leader despite important weaknesses
Paypal has become a standard in terms of online payment. The platform was created in 1998 and gathers more than 203 millions users and 16 millions businesses use it everyday. $ 8,000 are spent every second through Paypal transactions, which represents almost 315 billion each day. With 80 % of the market shares, Paypal is undoubtedly a leader within its industry.
Many companies choose Paypal when starting their business online. However, the platform must face a new and strong competition. Despite obvious qualities, the online platform also shows weaknesses, which lead online websites, bloggers or other users to try new solutions such as Payfacile.com.
A high commission rate
Commission rate is crucial when choosing an online payment system, as the price is directly supported by the online business. If the rate is too high, its decreases the company’s profit margin and may completely ruin its business model. Paypal offers premium conditions that also include high commission rates, a real struggle for online retailers who pay attention to margins optimization.
An account based system
In order to use Paypal to send and to receive payments, all you need to do is to create an account. However, as the American firm requires people to subscribe to use their services, they suffer the consequences of this choice and they lose customers. Indeed, a lot of them refuse to become members as they know they will have to create an account, even if it means they won’t be able to use the platform for their transactions.
Maximum protection for buyers
Paypal has always been very careful to protect buyers whenever using their online payment platform. This precaution benefits the customers and is very reassuring for them. They know that if they use Paypal, they will be protected. However, this might be controversial for sellers as any litigation is hard to settle. If a client declares any kind of problem with his order, there’s a lot of chance that he/she will be refunded. Unfortunately, dishonest customers are frequent and even if they are a minority, this situation can be very difficult to handle for sellers as they will lose money.
Continuous activity control over revenues
When you own a business, your number one priority is to increase your revenue by selling more. On Paypal, some situations may cause a lot of trouble to sellers. As an example, if you maintain a certain level of income during a period and suddenly experience an increase of your revenue, the platform may identify this situation as unusual and decide to freeze your account. As a consequence, your money will be blocked for an indefinite period of time and you won’t be able to access it. This issue can be very difficult for a business that needs to pay his suppliers or any other partners.
Paypal can’t be used in several regions around the world, such as Africa and the Middle East. To target those markets, online businesses must choose another payment system. This can cause a lot of difficulties to e-shops as they need to manage multiple payment solutions.
As we’ve explained it through this article, life isn’t always easy for online businesses who chose Paypal as their online payment solution. Luckily, there are many alternatives for online transactions such as Payfacile, who offers turnkey solutions to accept both one-time and recurring payments. By using Payfacile, you choose trust, security and quality without the weaknesses we previously stated. Our company has recently partnered with Stripe, one of Paypal’s main competitor on the market.